Friday, January 24

High-Level Voices:
CSRC Chairman Wu Qing introduced that the reform plan for Mutual Funds has been initially formed. This will improve the governance and positioning of fund companies.

Overall Sentiment:
Yesterday, after the regulatory authorities gave important instructions to the market, the market responded with a decline. Initially, they mentioned a 10% annual increase in A-shares held by Mutual Funds, followed by insurance companies investing 30% of their annual premium growth into A-shares. Given current insurance sales, this essentially means that the annual increase in Mutual Fund holdings will just be the portion from insurance, meaning the stock market would be entirely driven by insurance sales. The market panicked because future growth in the A-share market wasn't considered. 
If the market doesn't rise, any adjustments to save on fees would still result in investor losses.